Limited Company Savings

Confirming Bracknell Boy's post

My company has now been investing in p2p and p2b for just over a year after extensive research. All major sites that I am aware of accept business funds. Losses deductable from Corporation Tax payments. I can see no downside to this route at present. My excel-based accounting of interest received has been acceptable to our accountant.

We will have to see what will happen to payments net of tax deductions when or if it happens.

There was some discussion of the CCL issue here: p2pindependentforum.com/thread/247/lending-limited-company

My understanding (not a tax advisor) is that you don't need a license for loans to limited companies, or loans to individuals/partnerships which are over £25,000 and where the loan is to be used for business purposes. The outstanding question is whether, when your company lends under £25,000 on a loan which in total is over £25,000, you need a license or not.

(Source: www.oft.gov.uk/shared_oft/business_leaflets/consumer_credit/oft140a.pdf on the Consumer Credit Act 1974


'3.21 The Act does not regulate:

• a consumer credit agreement by which the creditor provides credit exceeding £25,000, or

• a consumer hire agreement requiring the hirer to make payments exceeding £25,000

provided in each case that the agreement is entered into by the debtor or hirer wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him.



3.22 An agreement is presumed to be wholly or predominantly for business purposes if it includes a declaration to that effect by the debtor or hirer, in a prescribed form, unless the creditor or owner knows or has reasonable cause to suspect that this is not the case. 'Business' is defined in section 189 of the Act, but a person is not to be treated as carrying on a particular type of business merely because occasionally he enters into relevant transactions.')

This sounds interesting. As a non-UK resident I am not that familiar with the circumstances.

Two question that would interest me:

1) Has anyone set up a Ltd for the sole purpose of investing in p2p loans? Experiences?
Or would it not make any difference whether a Ltd is actually operating in a different field and investing some of it's proceeds in p2p loans or whether it was actually set up to do just that and is not doing anything else?

2) What are the yearly overhead costs for the Ltd.
e.g. accountant , ...
I know this all depends again, but if anyone is doing this already pls just share your experiences on overhead costs. Thx.

I have some deposits with Zopa through a Ltd company. I selected Zopa because they seem to be the easiest to liquidate the loans if there is some clarification in what seems to be a totally undefined part of the law. It will probably be easier to get clarification on the CCL issue and Ltd companies one the FCA start to regulate this sector. If it looks like there might be an issue I should be able to sell my loans well before it becomes a problem.

You do not pay tax twice on dividends, you get a tax credit covering the basic rate of tax when you pay a dividend on taxed funds. If you have a company that has cash in it then P2P offers a much better return than a bank deposit. There is also the advantage of being able to offset bad loans against interest on your balanace sheet if you are going down the Funding Circle path (which you cant do yourself). The only thing is what the status of a company that lends through a P2P network is via the Consumer Credit License, at the moment this seems to be a bit "undefined" and is one of those grey areas of the law.

To be honest running your own company without an accountant is pretty straight forward unless you are doing alot of complex transactions, you just need a template for the accounts to be submitted and a bit of common sense. The days in which paying £1000 a year to have someone type a few numbers into a spreadsheet and submit your accounts for you because they are a respected accountant who is known to the local tax office are gone IMO, the tax inspector is basically a computer at HMRC now.

1. I'm sure I've read somewhere that at the moment you cannot offset bad debt from investing into p2p against tax liability (ie you sinply have to take any losses on the chin)

Have I got this wrong or is there a different rule for ltd cos?

2. Did I understand this correctly, if you set up a ltd co, you can treat the profit from p2p as dividends & only pay 20%, instead of say 40% if you're a higher rate tax payer?

Thanks